AMORTIZATION

[DEEPAK SHARMA]

X is manufacturer of plastics moulding products and Y is buyer of X. Y is regular procuring goods from X. once a day Y approached X for a new products, X told to Y that for this producys we needed mould.

Y got agree with X and said that you have insfrastucture for production of mould, you (x) please make a mould for this products and shipped us the said mould with charging excise duties.

X produced mould for that product, and shipped on excise invoice and charged appropriate excise duty at the rate of 12.36 percent  from Y and deposite the same and shown in ER-1.

Further Y Send the same mould to the X for further manufacturing of that products for which it was prepared on job work challan.

Excise Audit held and officer is asking duty on die cost. under valuaation act.

Please advice us.    

 

AI Summary

Excise Duty Dispute: Experts Debate Duty on Mold Costs and Amortization in Manufacturing Transactions X, a manufacturer of plastic molding products, created a mold for Y, a regular buyer, and charged excise duty on it. Y then sent the mold back to X for further manufacturing. During an excise audit, an officer questioned the duty on the die cost. One expert advised that the transaction involves two parts: procurement and supply of tools, with the notional value of tools needing to be added to the assessable value for excise duty calculation. Another expert noted that if the mold and raw materials are provided for processing, there is no need for amortization unless the supplier uses their own materials.